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How To Trade EOS - Step-by-Step Guide

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EOS is one of the major cryptocurrencies, and one of the biggest development platforms in the industry. It can be used for creating smart contracts, dApps, and even new cryptos. The EOS coin can, of course, also be used for trading

Trading EOS, like any other coin, mostly comes down to buying when the price is low and selling when it is high. That is how you earn a profit. But, in reality, it is more than that, and it also includes many other elements that we will explain today.

EOS Trading Summary

EOS trading requires you to know what you are doing, as it is not all as simple as it sounds. You need to know how to perform a thorough analysis and constantly monitor price activity to create good forecasts. You need to employ trading strategies and take advantage of volatile prices. Then, there is arbitrage trading, trading with leverage, and trading EOS derivatives, such as futures, CFDs and options.

All in all, trading EOS could potentially become a good option to make a regular income, provided it is done with caution and risk management practices are employed. Fair warning—doing so is not easy, and it requires certain attributes, such as patience and discipline. But, if you can master that, you stand to become a rather successful trader. Trading allows a user to benefit under both circumstances—when there is a price rise or a fall. 

Start Trading in 3 easy steps

1. Plan your Trades

One thing that needs to stay with you after reading this is that you cannot trade without a plan. Trading without a plan is just giving your money away, as you are sure to lose it. Simply put, you need to select a trading strategy to stand a chance in the highly competitive crypto industry.

2. Register on an Appropriate Platform

The second thing to do is to find the best platform for you to trade on, and then register on it. Registration is quick on most platforms, although it will likely also require you to verify your identity. Platforms are obligated to ask this to be compliant with regulations.

3. Long - Short

The third step is to fund your account and finally start trading, When you trade, you can go long (buy) or short (sell). We will explain in detail what this all means, but the point of it all is that you can start trading as soon as your account is verified.

EOS Trading Explained

EOS trading is a process that involved entering and exiting trading positions at a certain time and in a certain pattern. Essentially, you want to buy when the prices drop, and sell when they rise. In the meantime, you can hold your EOS coins in your crypto wallet and retrieve them when you wish to sell the asset.

While this sounds simple enough, there is more to it than that. But, to explain these complex details about EOS trading, we first need to explain some basic concepts that surround it. For example, you have derivatives, such as CFDs, options and futures.

EOS trading is, of course, speculative. You speculate that the price of the coin will rise, and so you buy it intending to sell when it does. Derivatives are even more speculative, as they allow you to bet on which way the price will go, including down. That means that you get to earn a profit even if EOS price drops, as long as you are correct in your prediction.

If you bet that the price will go down, you take a short position or go short. If you expect it to go up, you take up a long position or go long. Then, there is also trading with leverage, which is a method of trading where you use a small portion of your own money to buy a much larger worth of assets. This is possible as you borrow the remaining amount of money from your exchange or broker. While this method promises high rewards, it is also very risky, and not recommended for novices.

Trade EOS: Establish a Proper Plan

As noted above, being successful at trading EOS requires you to come up with a good plan. That includes not only having a trading strategy but also understanding how the prices move. To do that, you need to know how to perform fundamental and technical analysis.

Understand What Moves the Price of EOS

When it comes to the fundamental analysis, it revolves around understanding how the market feels. We mean that quite literally, and the reason for that is the fact that cryptocurrencies do not have underlying assets that would give them value, and maintain it. Their prices move up and down based on things like supply and demand, positive or negative news, price predictions and forecasts, celebrity endorsement, institutional investors’ interest, regulatory bodies’ stance, and more.

Anything that can make investors and traders feel positively or negatively towards the coin can and should be considered when making a fundamental analysis, as it could have a significant impact on how EOS price moves. The same is true for any cryptocurrency except for stablecoins.

Technical Analysis: Read the Charts!

Technical analysis is the part that most people probably won’t find that exciting, but it is a lot more reliable for predicting price behaviour. It revolves around reading the charts, noticing patterns, discerning the price action, revealing trends, finding resistances, supports, and more.

The charts can show you the price’s past performance, and help you figure out what to expect. They can tell you if the price is behaving in a bullish or bearish fashion, how much are people buying based on trading volume, and many other interesting and insightful details.

With all that said, it should also be noted that not even the charts can tell you the future for sure. They can indicate bullish or bearish behaviour of the price, which could change in a flash if some major news emerges and impacts the project. For example, if the project’s price is moving up, and all signals indicate that it will keep going up, a major hack or a coin oversell by a major investor could turn things around.

The price could turn just as easily if it keeps dropping, and suddenly institutional investors start buying millions, or even billions of dollars worth of the coin. Its value would go sky-high in minutes, despite what the charts have said. So, keep that in mind, and remember the risks when you trade. Certain platforms like eToro have introduced social trading where you can study by observing other users’ trades. 

Common Strategies to Trade EOS

HODL EOS

One strategy for trading EOS is HODLing. The term HODL comes from a misspelling of the word HOLD, but it means the same thing. Essentially, you are to lock away your coins inside your wallet and don’t sell them under any circumstances. The whole concept is based on the fact that crypto prices will skyrocket someday, and that you won’t be affected by minor drops and surges. You are waiting for a big one, and you are prepared to wait for years, if need be.

Trend Trading

Next up, we have Trend Trading, which is a strategy that allows you to earn money by holding a position when the price is moving up or down, depending on the trend. The goal is to hold your position for as long as possible, and only exit it just before the trend changes.

Naturally, crypto prices are very volatile, and trends change multiple times per hour. But, if you aim to ride a larger trend, you can choose a different timeframe and ride a trend for day, week, month, or even multiple months.

News Trading EOS

Lastly, you can also news trade EOS, which is essentially keeping an eye on the news, and investing as soon as you notice any positive EOS-related development, in hopes that it will cause the price to jump. This can be risky as the news sometimes might not influence the price as much as you had hoped it would, or the price surge can suddenly stop to be replaced by a sudden correction before you can react. In essence, all trading strategies come at a risk, you just need to know the circumstances under which you might experience losses, and prepare for them.

Choose a Platform that Fits your Trading Strategy

Once you have your trading strategy figured out, the next step is to find the platform to trade on. You can essentially choose between crypto exchanges and brokers, although, when it comes to exchanges, you can also split those into two kinds—regular exchanges and derivatives exchanges.

Let’s start with brokers. Brokers are services that allow you to create an account and use them to reach various exchanges and trading platforms, as well as various investment and trading instruments. Through brokers, you can trade derivatives of crypto-assets like EOS.

Furthermore, you can even instruct them to trade on your behalf, tell them when to enter and exit positions and so on. The obvious benefit here is that you don’t have to create an account on several different platforms if you wish to access different assets. Instead of having an account on one regular exchange, one derivatives exchange, and one stock exchange—you can just use brokers. They are even a safer option as they are obligated to obtain licenses from regulators, which means that there is a lower risk of you permanently losing your money.

On the other hand, brokers also charge you for their services, so you can expect some extra costs.

Your alternative is to use regular and derivative exchanges. Regular exchanges let you trade cryptos, while derivatives exchanges let you trade crypto options, futures and CFDs. The downside is that most of them are not regulated, and you cannot access as many assets as you can on brokers. Also, you would have to keep an eye on multiple platforms and have verified accounts on each to reach the best prices, while brokers that work with multiple exchanges let you check their prices out and select which to trade at from the broker’s platform.

Set up Your Trading Account

Before you start trading, you will also have to set up your trading account on the platform of your choosing. Be that broker, derivatives exchange, or a plain old crypto exchange, you need to register, verify your identity, and deposit some funds to get you started. The process is simple on all platforms, although they will ask you to provide different details to prove your identity. Some platforms might only need a photo of your ID, while others might want photos of your bills or something else to prove that you can, indeed, be found at an address where you claim to be living.

Open your First EOS Trade

At this point, you are almost ready to start trading. But, before you do, we should note that your first trade might be different depending on which platform you use. With that in mind, make sure to remember that some things might not be available on all platforms.

With that out of the way, we would also want to explain what kinds of things you may expect while trading, and also what they mean and how you should treat them.

Order Type

First, you should think about selecting an order type. There are multiple order types, such as All or None order, Stop Loss, Trailing Stop Loss, Market Order, Limit Order, Immediate or Cancel Order, and alike. Different traders prefer different orders, depending on the market situation and the traders’ own unique method of trading. A limit order executes a buy/sell at a predetermined price level selected by the user while a market order will execute the price at the prevailing market price. 

Buy or Sell?

Earlier, we mentioned buying and selling, bids and asks, going long, and short. These refer to the action you will take with your coins or derivatives contracts. So, if you expect that the coin price will go up, you will buy, or bid. If you expect it to drop, you will sell, or ask. When you trade derivatives and bet that the price of the underlying asset will drop, you go short. Alternatively, if you expect it to go up, you go long, as we explained before.

You should also remember to look into spreads, as they often indicate how much liquidity you can expect. Spreads are measures that show the difference between the highest bid and the lowest ask, and if that difference is short, then liquidity is likely to be high, and vice versa.

Amount

In terms of the amount, you are pretty much free to invest/trade as much as you feel comfortable investing/trading. With that in mind, we do have a couple of suggestions worth considering. For example, don’t use too much money in your very first trades. Trading is complicated, and people win and lose money all the time. It will take time to figure things out, and until you do, you are mostly depending on blind luck, even if you did your research.

There is nothing like experience, and you need it to grow more comfortable with trading and have your trades become more precise. So, start small. Also, don’t ever use the money you cannot afford to lose. Always assume that your trade will end badly, and only use the funds that you can live without.

Leverage on EOS

Next up, we have leverage. We mentioned leverage briefly earlier, noting that it is a sort of loan that you can take from your exchange or broker to be able to buy a bigger amount of crypto than what you can afford with your account’s funds. Trading with leverage brings the ability to earn huge rewards, but only if you get it right. And, given the fact that your room for mistakes gets considerably smaller, that is quite a major risk to take. It is not something that novice investors should even think of trying, as it typically doesn’t end well and a new trader could lose all his funds.

Stop-Loss and Trailing Stop-Loss

Among different order types, we also mentioned stop-loss and trading stop-loss. These can also be viewed as risk management tools, which are quite easy to understand. Essentially, stop-loss allows you to select a price below the asset’s market price, and turn it into a trigger. If the asset’s price ever drops enough to touch that price and activate the trigger, your order will get closed automatically. That way, you can prevent major loss of funds, as the price would simply keep dropping.

Trailing stop-loss works similarly, but if the price rises instead of dropping, then the selected trigger level moves up with it. That way, your trigger can end up being above the original asset price level, if the price surged enough. If it only starts dropping after such a surge, you can even end up with gains, which makes trailing stop-loss a superior risk management tool.

Take profit

Another order type worth considering is called take profit. This one works similar to stop-loss, only in reverse. Instead of selecting a level that will be triggered below the price, you select one above the asset price at the time you enter the market. Then, if the price surges and reaches the trigger level, your position will be closed, and it will ensure that you keep the funds.

It is a good thing to have if you expect a surge followed by a correction, but can’t afford to keep an eye on the market at all times. It might not let you exploit the full potential of the surge, but it will get you something, and when it comes to trading—any gains are better than no gains, and definitely better than losses.

Finishing touches

There are a few last details that you should keep your eyes open about, such as triggers—signals that will notify you of the right time to make a move; commissions—different platforms have different fees for things like deposits, withdrawals, trades; Pips, which are tiny measures in the change of the price, and more.

Open Your EOS Trade

At this point, you should know everything you need to open your first EOS trade. Just make sure to check if everything is set right, and that you have not made an error in setting it up. It often happens that traders who know what they are doing make a mistake, even if it is just a typo, and mess up their trade.

Double-check everything before making it official, and if you are still satisfied with how it all looks, then the only thing that remains is to execute the trade by clicking on the buy/sell button.

Closing Orders

One last thing about trading EOS that you should know is that you can close your position manually, or let it close automatically. You may want to do this if you notice that the price is moving unfavourably, or if you are simply satisfied with achieved gains. Automatic closure happens when one of the triggers are activated, whether for stop loss or take profit, while closing the position manually can be done at any time with a single push of a button.

Final Thoughts: Ready to Trade EOS?

EOS is a coin with a lot of potential which is why a lot of people opt to trade it. The coin has a massive market cap, as well as a huge trading volume to prove it. In other words, trading it is attractive to a lot of people, including crypto newcomers. That is why we wanted to talk about how to trade EOS, and go through the process from start to finish. Hopefully, what you have learned here today will help you to start your journey as an EOS trader, and help you grow into a successful one. Remember to practise risk management and never invest more than what you can afford to lose.

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Frequently Asked Questions

  1. EOS is a legitimate project in most jurisdictions. It works more like a development platform than a cryptocurrency meant for digital payments, although it can technically be used for both.

  2. At the time of writing, the EOS price is 50% higher than it was a week ago, currently sitting at $4.71. Whether the coin will continue going up or not depends on many factors, as we explained earlier in this guide. Not a lot about it is certain, apart from the fact that anything can happen, and that no one can know about it with certainty before it happens

  3. That depends on what you want it for. If you are looking for major profits quickly, then EOS is probably not for you. This is a project that is meant to be used for development, and you can HODL its coins in hope that they will see massive growth, but that is something that you might have to wait an entire decade for. EOS coins do not see massive changes as some other cryptocurrencies. If, on the other hand, you want to use its ecosystem, then yes, EOS is certainly worth buying and using.

  4. At one point, many have speculated that EOS is Ethereum’s largest competitor, and potentially the fabled ‘Ethereum Killer’. To this day, no single project has managed to overtake Ethereum, and even now, only Bitcoin—which doesn’t count (as it is not a development platform) is a larger project than ETH. EOS does have a faster blockchain and it can handle more transactions at cheaper rates, but Ethereum is going through its Ethereum 2.0 upgrade which aims to make it just as competent, if not more.